The U.S. reimposed sanctions in November on exports of Iranian oil after Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers. They're no longer trading in Iranian oil (at least not officially), but they will see this escalation as particularly unwelcome.
"Should Iran's sanction waivers indeed be lifted, that could boost oil prices towards the $80 per barrel mark", said Han Tan, analyst at futures brokerage FXTM.
The decision means sanctions waivers for five nations, including China and India and USA treaty allies Japan, South Korea and Turkey, won't be renewed when they expire on May 2. The news will disappoint a handful of countries that rely on Iranian oil, but Pompeo insisted that the waivers have to stop immediately.
Removing the sanctions exemptions would reduce oil supply from a market that is already tight because of United States sanctions against Iran and fellow OPEC-member Venezuela.
Government officials there declined to comment, but Kim Jae-kyung of the Korean Energy Economics Institute said the end of the sanction waivers "will be a problem if South Korea can't bring in cheap Iranian condensate (for) South Korean petrochemical makers".
"We have agreed to take timely action to assure that global demand is met as all Iranian oil is removed from the market", the statement said.
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Iran's exports have fallen to less than 1 million barrels per day from more than 2.5 million bpd before sanctions were re-imposed a year ago.
India was among eight countries that were granted waivers from secondary impact of sanctions for a period of six months to enable them to reduce their import of Iranian crude to zero in a phased manner.
China and India are now the largest importers of Iranian oil.
According to some analysts, the end of the waivers were expected to hit Asian buyers, including China and India, the hardest. "Under sanctions from the beginning, there was talk of a gradual reduction and not going to zero on one stroke", said the source, who did not wish to be identified due to the sensitivity of the issue. US officials say Pompeo plans to announce on Monday, April 22, that the administration will not renew sanctions waivers for the five countries when they expire on May 2. It is meant to further ramp up pressure on Tehran by restraining the revenue it gets from oil exports.
China opposes Washington's "unilateral sanctions and long-arm jurisdiction", said a foreign ministry spokesman, Geng Shuang.